Hotel taxation and hotel legal structure: a strategic guide for investors and lawyers
The legal and tax keys to securing, optimising and enhancing the value of a hotel asset
Reading Time: 6 Minutes
Key Takeaways
Quick Facts About the Article
VAT rate applicable to hotel accommodation in France
Depreciable portion of a hotel asset subject to corporate tax (excluding land value)
Standard corporate income tax (CIT) rate in France
In Brief
In This Article
A high-performing hotel investment doesn’t rely solely on location, concept, or occupancy rate.
The success of a hotel project is often determined well in advance: through its hotel tax framework and the choice of its legal structure.
For private investors, family offices and law firms advising on hotel transactions, these structuring decisions directly impact net profitability, asset transferability, risk management and the ability to refinance the asset.
This guide provides a technical, clear and practical overview of the key tax and legal considerations involved in a hotel investment in France.
Why hotel taxation is a key driver of asset performance
Understand the tax levers to secure and optimise hotel profitability
Hotel taxation differs fundamentally from that of a traditional real estate asset.
Unlike an office or residential building, a hotel falls under a commercial activity (industrial and commercial profits – BIC) rather than simple asset management.
1. Operation vs. Asset Holding Structure
A hotel can be structured under several different models:
Direct operation
Ownership of both the real estate (walls) and the business (goodwill) within the same entity
Separation of the real estate (walls) and the business (goodwill)
Implementation of a commercial lease with an operating company
Each configuration changes:
The applicable tax regime
The level of risk borne by the investor
The ability to distribute dividends
The transfer arrangements
2. Taxation of profits: Personal Income Tax (IR) or Corporate Income Tax (IS)?
Two main approaches prevail:
Personal Income Tax (IR)
Suitable for small structures or family holding companies, but generally less efficient for long-term capitalisation strategies.
- Corporate Income Tax (IS)
Often preferred in structured hotel investments. It allows for:
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The depreciation of the building (excluding land)
The depreciation of furniture and fixtures
Cash flow optimisation through the allocation of retained earnings
A more flexible refinancing strategy
In a hotel transaction, depreciation can represent a major lever for reducing the taxable base.
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2.Hotel legal structure: which options to secure and optimise the investment?
Choosing the right legal framework to structure performance
The choice of the hotel legal structure depends on:
The profile of the investors
The size of the transaction
The exit strategy
The desired level of pooling
The most common structures
SAS or SASU
High degree of flexibility in the articles of association, ideal for institutional investors or multi-shareholder structures.
SARL / Family SARL
Well suited to asset-based projects, with the option to elect Personal Income Tax (IR) under certain conditions.
Property holding company (SCI) + operating company
Classic separation structure:
The property holding company (SCI) owns the real estate (walls)
An SAS or SARL operates the business (goodwill)
A commercial lease governing the financial flows
This model allows for:
Risk segregation
Optimisation of hotel taxation
3. Hotel taxation: key watchpoints for lawyers and advisors
Tax and contractual structuring decisions that secure the transaction
VAT
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10% VAT rate on accommodation
VAT recovery on works and furniture
A key consideration during major renovation phases
Transfer duties
The distinction between:
-
Share transfer
Transfer of business assets (goodwill)
Real estate sale
has a significant impact on the overall tax treatment of the transaction.
Shareholders’ agreement
In a multi-investor hotel legal structure, the shareholders’ agreement must anticipate:
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Tag-along clause
Liquidity clause
Governance arrangements
Moon Hospitality’s analysis
Strategic alignment at the heart of sustainable performance
It must align with:
It must align with:
The asset positioning
The operating model
The holding period
The investors’ overall asset strategy
A poorly calibrated hotel legal structure can significantly reduce actual profitability, even if operations perform well.
This is why we support our partners from the structuring phase onwards, in collaboration with their lawyers and tax advisors.
To go further:
Discover our approach to hotel management
Read our article on hotel repositioning
Contact our team to explore an opportunity
